On August 24th 2009 I got an email from Amazon, here are its highlights:

We have found your Associate links are appearing as sponsored links on search engines under the term “kindle” and variations of this term. This activity is prohibited by the terms of the Operating Agreement……We may withhold any referral fees…We also ask that you take preventative measures, such as adding Amazon’s Proprietary Terms to your negative keywords. In addition, you will not receive payment for referral fees earned through the use of these keywords.

At this point I was almost 1 year into online marketing and it was my first big success in affiliate marketing. This was my first payment to be received from Amazon and I invested heavily in PPC marketing in order to get there, here are my expenses for the 3 months I was actively promoting my website.Adwords search network campaign:

Adwords display network campaign (at the time it was called the “content network”):

Add another $2K from Yahoo and Bing and you get around $12K in PPC expenses. My payout was to be just a little over $21K, so I felt I was on a roll. All the time there was a voice in the back of my head that was worried that I am spending money and still not getting paid (Amazon pays 60+ days after you’ve made a sale).

I had no idea what the email was referring to. I have thoroughly read the TOS of the associate program and had known that I cannot bid on propriety terms, so I didn’t. My only guess was the KWs in broad match might have triggered ads with these terms. So if, for example, I bid on “ebook reader review” the KW “amazon ebook reader review” would also bring up my ads.

To make a long story short, I tried everything possible to sort this out (emails, Skype calls, sending KW reports to show what I was bidding on) but in the end I received the following answer:

I have reviewed your account history again and confirmed that your ads did appear on Yahoo.com for searches using the keywords “kindle reading device,” “kindle review,” “kindle book reader,” “kindle reviews,” and “kindle ebook” between June 19 and July 21, 2009…

While I understand that you do not agree with this decision, it is final based on multiple reviews of your account history. Any further messages regarding this issue will not receive a response.

I was petrified. I spent almost all of my savings at the time on this, and now, not only will I not get paid, I also owe money to people that I borrowed from in order to invest in my different marketing campaigns.

In the end around 2/3of the amount was paid to me so I made maybe just a little over $1k on these 3 months. This incident was just one out of many I’ve had in the 5 years I’ve been an affiliate marketer. Each incident teaches me a valuable lesson about how to diversify the risk involved with this occupation and that is what I wish to share with you today.

eReader Central back then:

eReader Central after some design touches:

Rule #1 – Test each affiliate program before investing efforts in promoting it.

Today, whenever I choose an affiliate program to work with I always test it out first. Meaning I invest as little amount as possible to test the following things:

Reports are coming in accurately (basically that clicks are showing)

Conversions are registered and there’s a reasonable conversion rate

Payments are met on time

This means that before I start really getting down to business with promoting a certain product I will have at least 2-4 weeks of testing this out. And since my Amazon incident I NEVER invest my own money before getting paid for the first time. It’s always a painful time for a company (even Amazon) to take money out of its own pocket, so I want to see they’re good for it.

Rule #2 – Never rely to heavily on one vendor

When I was promoting eBook readers about 92% of my profits were coming from Amazon. That is why I was completely crushed when this happened. Today, as soon as I test out an affiliate program and I see it’s working, I immediately start looking for another one with a similar product so I can diversify my risk.

For example, today I promote several Forex companies. So although I can probably make more profit by promoting just one company, I actively choose to promote two, even though one of them is less profitable. That way I always have leverage to negotiate terms and more importantly I’m not too reliable on any one of them.

Rule #3 – Never rely to heavily on one product

Whenever you’re selling a product to someone you’re targeting a specific persona. In my case it was wealthy, tech savvy old dudes (surprisingly enough most of my customers were 50-60 years old). And if you know the persona, you know what other products they’re interested in.

For example, I could have easily also offered several different tablets that were coming out at the time. Have I already mentioned that you need to diversify you risk? This doesn’t mean you need to lose focus and sign up to 10 different affiliate programs but as General Tolwin said in Wing Commander 4 “The price of freedom is eternal vigilance”.

Rule #4 – Build a good relationship with your affiliate manager

Affiliate programs that have dedicated affiliate managers put me at ease. This usually means that the company respects its affiliate and that I’ll have someone to talk to when I need it. Also, it’s important to be noticed by your affiliate manager so he will know to answer you when you need.

What I usually do when I sign up for a program is send an email to my affiliate manager with a short introduction about myself and some questions about the program to show that I mean business. This will also help you further down the road when it’s time to renegotiate your terms.

Rule #5 – Always use several traffic sources

This one I’ve learned not from the Amazon incident but rather from a different project. I see too many affiliates that are focused only on SEO or PPC or list building. Again, you have to diversify risk, and if this means getting dirty and learning a bit of social marketing or content marketing then it’s just something that you’ll have to do.

On the last Google algorithm update I’ve suffered a massive blow to my SEO traffic (lost around 2/3 of it), and this got me figuring out different ways I can bring traffic to my website other than SEO (but all about that in a different post).

Blogger and owner of 99Bitcoins. I've been dealing with Bitcoin since the beginning of 2013 and it taught me a lesson in finance that I couldn't get anywhere else on the planet. I'm not a techie, I don't understand "Hashes" and "Protocols", I designed this website with people like myself in mind. My expertise is online marketing and I've dedicated a large portion of 99Bitcoins to Bitcoin marketing.